You’ve got to think all these recent joint Chinese-U.S. investment ties will start turning into some real cooperation between the two countries. Recent developments suggest we’re breaking through to a deeper level of collaboration — in the tech world, at first. And maybe reform in Beijing later?
There’s an intriguing news today from VentureWire (subscription only) about Infotech Ventures Co., a Beijing-headquartered venture firm backed by China’s Ministry of Information Industry (see summary of structure here) and several large Chinese corporations.
Infotech is raising $100 million for its third fund, which will focus on US-China hybrid start-ups, VentureWire reports. The article quotes Roger Li, a partner at Infotech:
“When you do real technology, you can’t get away from Silicon Valley,” he said. “You don’t want to fund a company purely in China while you have three late-stage U.S. firms planning to release products in two years or two months.”
Sure, another force driving such relationships (more)…
…is the difficulty the Chinese have in obtaining dollars. As the article notes, converting Chinese currency into dollars can take months — not good if you want to make a swift investment offer. By raising the fund this time in U.S. dollars, the firm can compete more effectively in the U.S.
Of course, there are still the bureaucratic differences. Check the links above, and you’ll get a sense of the unwieldy approval steps that a venture fund like Infotech has to go through. Infotech’s org chart is so big that we couldn’t easily paste into our entry here, so we’ve had to break it up in parts (see graphics; comic relief?).
Separately, yesterday, VentureWire reported that Palo Alto’s Trident Capital announced a $10M investment (sub req) into Shanghai’s Mustang Ventures, which recently made its first investment in Silicon Valley’s Augmentum, founded by the former COO of Cadence Design Systems, a San Jose electronic design company. We haven’t checked whether there any Chinese investors in Mustang — it appears to be run by folks hailing from Silicon Valley.
Good stuff from VentureWire lately.
China’s got to be doing some thinking about how to streamline and privatize its investment companies so that it can be more nimble in the U.S. On Tuesday, China’s CNOOC abandoned its $18.5 billion bid to take over U.S. based Unocal, conceding that a political backlash in Washington DC over China’s growing appetite for oil had ruined the chances of a deal. The fury of the backlash was driven by the fact that CNOOC is state-owned. Had CNOOC been a private concern, Washington would have been forced to review the offer more like it would any other business offer, and given CNOOC a fair shake.
Cash-laden Chinese companies are eager to bid for U.S. companies, so perhaps there will be reform down the road? And ever closer ties? It’s going both ways.
Gobi Partners, a small Shanghai-based early-stage venture capital firm focusing on digital media (a summary here), reportedly is seeing a slew Silicon Valley and other U.S. investors seeking to invest in its most recent $200M fund, though we haven’t confirmed this with more than our one source (who is a participant). Last year, IBM committed US$10 million to Gobi, its first in a Chinese firm. Apparently Gobi has family ties with folks in China’s technology ministry.